Transformation of the Turkish Automotive Sector: The Electric Vehicle Challenge

Introduction

A global pursuit for transforming the economies into a lower environmental-impact model has been going on for a long time. The automotive sector is the usual suspect for such quest. Improving efficiency in production facilities, squeezing engine volumes and significantly decreasing consumption per mileage have always been on the spot in this manner. But the primary element of lowering carbon emissions is decreasing the fossil fuel dependence of the motor vehicles. If all vehicles would have no carbon emissions at all, engineers who have been endlessly working on progressively smaller and more complex engines might finally get some rest.

Despite the contemporary struggle by the environmentalists for bringing down the petroleum powered cars, the invention of the Electric Vehicles (EVs) goes back in time. The early versions of an EV had been built in Hungary, the Netherlands and the US during the 1830s. By end of the first decade of the twentieth century, almost one third of all vehicles in the US had been EVs. Moreover, even a hybrid car was invented by Ferdinand Porsche in 1901. The EV era was over when Ford Model T had been dominated the automotive sector in just a few years as an affordable transportation solution (U.S. Department of Energy, n.d.).

There has been much research and development (R&D) done by almost all of the big automotive manufacturers around the world in order to adapt EVs into their product lines. The most important EV producer in the contemporary car market can be seen as Tesla Motors for several reasons (Thomas and Maine, 2019). In the middle of automotive giants, surprising rise of Tesla Motors raise questions about its future in the global car market as a major player. However, the current global market for EVs remains extremely limited of scope. Global firms with millions of cars sold each year seem like taking their time. In 2019, global EV sales accounted to only 2.6% of total car sales and the EV share is only 1% in total car stock (International Energy Agency, 2020). This can be associated with the same reason as disappearing of EVs in the first place after the first decade of the twentieth century.

Production and maintaining conditions can still be considered as unappealing for both producers and customers. Expectations on the EV transition of active big firms stood unclear in the midst of Covid-19 pandemic. There have been discussions about which part of the world might be the future leader in the EV market, China, Europe or the US (e.g. Jetin, 2020). In this context, however, there can be no healthy inferences about the future players in the EV market due to its proximity to a possible technological and methodological shift. The EV share in global car market can still be considered as a frictional side market by looking at it accounting perspectives. On the other hand, it gathers much more attention from all related parties that taking into account its future impact. Nilsson and Nykvist (2016) expect a total EV transition by 2050 if a breakthrough happens during the development period.

As an experienced automotive manufacturer, Turkey is following the global trend of the EV transition and on an enthusiastic start. The country is one of the top 10 largest car exporters in the world, yet without a single national brand. The ambitious efforts for a Turkish car had started in 1961, but Turkey’s first 100% nationally produced passenger car brand Devrim did not succeed to mass production (Tülomsaş A.Ş., n.d.). FIAT, Renault, Ford, Toyota, Honda and Hyundai currently produces passenger vehicles in Turkey and there have been producers of several other types including military vehicles and trucks, e.g. BMC, Man and Mercedes. Fortunately, a government-led action group called TOGG has been initiated in 2018 and the country is hoping to embrace this new line of transportation with a Turkish product in the near future.